Happier Consumers Ready to Spend Over Holidays

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Published November 07, 2012

| BusinessNewsDaily

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A major decline in the number of Americans facing financial difficulties and a rise in consumer sentiment augurs a happy holiday season for retailers, regardless of the outcome of this week’s election, according to a new Consumer Reports (CR) index.

The index's Trouble Tracker, which looks at both the proportion of consumers that have faced financial difficulties as well as the number of financial hurdles they have encountered, dropped by 11.5 points in October, to 38.7. That marks its lowest level since the tracker was first measured in April 2009, Consumers Reports said. The index is based on more than 1,000 interviews with American adults ages 18 and older.

The largest improvement occurred among middle-class families earning between $50,000 and $99,000 a year, a group that posted a 12.9-point drop in the number reflecting financial woes. Those earning less saw relatively modest improvement, dropping by 5.7 points.

Consumer sentiment also pushed into positive territory for the first time since July, Consumer Reports said, largely buoyed by gains among Americans earning $100,000 or more per year. Though lower-income Americans experienced a modest rise, their sentiment remained in negative territory.

The employment index also edged up into positive territory this month, climbing from 49.7 in September to 51.5 in October.

The CR retail index, which reflects planned consumer buying activity, contained particularly good news for retailers. It showed gains across most categories, led by items that are usually popular as holiday gifts, such as personal electronics (21.4, up from 15.9 the prior month) and small appliances (13.8, up from 9.3).

"There is reason for optimism this month, with financial difficulties in decline and sentiment moving upward. These are very heartening signs for retailers, especially as we get into the all-important holiday shopping season," said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.

"Job losses fell sharply and more Americans started, versus lost jobs. However, job starts remain at relatively low levels. Continued progress will hinge on increasing job starts over the coming months, to sustain gains."